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AFM clarifies the term ‘group’ in respect of EUR 2,5 million-exemption

  • Netherlands



    Institutions that issue securities to the public or admit securities on the Dutch market or on the functioning and regulated market are obliged to publish a prospectus. Institutions are exempted from this obligation if the total equivalent of the issued securities of a group of connected entities is less than EUR 2,5 million over a period of 12 months (the Exemption). This should also be the case when more offers are being made within the group. The Netherlands Authority for Financial Markets (Autoriteit Financiële Markten, AFM) recently clarified the term ‘group’ further in respect of the Exemption. 

    Pursuant to article 2:24b of the Dutch Civil Code a group is defined as an economic entity formed by legal entities and companies. According to the explanatory memorandum and jurisprudence the essence of the definition of the term ‘group’ entails an assembly of legal, independent companies under central management. The AFM provides the following (non-exhaustive and non-cumulative) reference points to determine whether a group of entities is a group in respect of the Exemption:

    • control structures (is control possible on the basis of the articles of association, shareholdership, membership or a contractual (management)relation?);
    • shared policy or strategy;
    • joint monitoring (for example centralized planning and controlling system);
    • consolidated financial statements;
    • joint financing and/or guarantee for debts;
    • joint purchasing; and
    • external statements to the public.

    Should an institution be exempted from the obligation to publish a prospectus, than the institution should include this exemption in its advertising material if it does not offer securities to qualified investors exclusively.

    The AFM expects that the exemption limit will increase to EUR 5 million. The definition of the term ‘group’ will in this case remain unchanged.   


    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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